BILL NUMBER: AB 2069	CHAPTERED  09/18/00

	CHAPTER   472
	FILED WITH SECRETARY OF STATE   SEPTEMBER 18, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 16, 2000
	PASSED THE SENATE   AUGUST 25, 2000
	PASSED THE ASSEMBLY   AUGUST 25, 2000
	AMENDED IN SENATE   AUGUST 18, 2000
	AMENDED IN SENATE   AUGUST 7, 2000
	AMENDED IN SENATE   JUNE 14, 2000
	AMENDED IN ASSEMBLY   MAY 16, 2000
	AMENDED IN ASSEMBLY   APRIL 27, 2000
	AMENDED IN ASSEMBLY   APRIL 13, 2000
	AMENDED IN ASSEMBLY   MARCH 27, 2000

INTRODUCED BY   Assembly Member Corbett

                        FEBRUARY 22, 2000

   An act to add and repeal Section 6086.11 of the Business and
Professions Code, and to amend Section 1714.10 of the Civil Code,
relating to attorneys.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2069, Corbett.  Attorneys:  defense of insureds.
   (1) Existing decisional law in this state deems that an attorney
who is hired by an insurance company to defend an insured represents
2 clients, the insured and the insurer.  Existing rules of
professional conduct for attorneys, as interpreted by judicial
decision relating to conflicts of interest, require a court to
disqualify an attorney from representing a client if the attorney is
representing a client with interests that are adverse to a former
client and there is a substantial relationship between the subjects
of the current and former representation.  Those rules and decisions
in all but a few instances also require a court to disqualify an
attorney from representing a client where the attorney has another
current client in a wholly unrelated matter whose interests are
adverse to the first client.
   This bill would require the State Bar of California to conduct a
study, as specified, concerning the legal and professional
responsibility issues that may arise as a result of the relationship
between an attorney and an insurer when the attorney is retained by
the insurer to represent an insured, and the attorney is subsequently
retained to represent a party against another party insured by the
insurer.  The bill would require that a report of the study, with any
recommendations, be submitted to the Legislature and the California
Supreme Court on or before July 1, 2001.
   (2) Existing law requires a court, prior to the filing of an
action by a party against an attorney for a civil conspiracy with his
or her client arising out of an attempt to contest or compromise a
claim, to determine that there is a reasonable probability that the
party will prevail in the action.
   This bill would require the attorney rather than a party to raise
that defense upon the first court appearance.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 6068.11 is added to the Business and
Professions Code, to read:
   6068.11.  (a) The Legislature finds and declares that the opinion
in State Farm Mutual Auto Insurance Company v. Federal Insurance
Company (1999) 72 Cal. App. 4th 1422, raises issues concerning the
relationship between an attorney and an insurer when the attorney is
retained by the insurer to represent the insured.  These issues
involve both the Rules of Professional Conduct for attorneys and
procedural issues affecting the conduct of litigation.
   (b) The board in consultation with representatives of associations
representing the defense bar, the plaintiffs bar, the insurance
industry and the Judicial Council, shall conduct a study concerning
the legal and professional responsibility issues that may arise as a
result of the relationship between an attorney and an insurer when
the attorney is retained by the insurer to represent an insured, and
subsequently, the attorney is retained to represent a party against
another party insured by the insurer.  The board shall prepare a
report that identifies and analyzes the issues and, if appropriate,
provides recommendations for changes to the Rules of Professional
Conduct and relevant statutes.  The board shall submit the report to
the Legislature and the Supreme Court of California on or before July
1, 2001.
   (c) This section shall remain in effect only until January 1,
2002, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2002, deletes or extends
that date.
  SEC. 2.  Section 1714.10 of the Civil Code is amended to read:
   1714.10.  (a) No cause of action against an attorney for a civil
conspiracy with his or her client arising from any attempt to contest
or compromise a claim or dispute, and which is based upon the
attorney's representation of the client, shall be included in a
complaint or other pleading unless the court enters an order allowing
the pleading that includes the claim for civil conspiracy to be
filed after the court determines that the party seeking to file the
pleading has established that there is a reasonable probability that
the party will prevail in the action.  The court may allow the filing
of a pleading claiming liability based upon such a civil conspiracy
following the filing of a verified petition therefor accompanied by
the proposed pleading and supporting affidavits stating the facts
upon which the liability is based.  The court shall order service of
the petition upon the party against whom the action is proposed to be
filed and permit that party to submit opposing affidavits prior to
making its determination.  The filing of the petition, proposed
pleading, and accompanying affidavits shall toll the running of any
applicable statute of limitations until the final determination of
the matter, which ruling, if favorable to the petitioning party,
shall permit the proposed pleading to be filed.
   (b) Failure to obtain a court order where required by subdivision
(a) shall be a defense to any action for civil conspiracy filed in
violation thereof.  The defense shall be raised by the attorney
charged with civil conspiracy upon that attorney's first appearance
by demurrer, motion to strike, or such other motion or application as
may be appropriate.  Failure to timely raise the defense shall
constitute a waiver thereof.
   (c) This section shall not apply to a cause of action against an
attorney for a civil conspiracy with his or her client, where (1) the
attorney has an independent legal duty to the plaintiff, or (2) the
attorney's acts go beyond the performance of a professional duty to
serve the client and involve a conspiracy to violate a legal duty in
furtherance of the attorney's financial gain.
   (d) This section establishes a special proceeding of a civil
nature.  Any order made under subdivision (a), (b), or (c) which
determines the rights of a petitioner or an attorney against whom a
pleading has been or is proposed to be filed, shall be appealable as
a final judgment in a civil action.
   (e) Subdivision (d) does not constitute a change in, but is
declaratory of, the existing law.
